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Victims of the Hungarian Holocaust v. Hungarian State Railways

July 8, 2011

VICTIMS OF THE HUNGARIAN HOLOCAUST, PLAINTIFFS,
v.
HUNGARIAN STATE RAILWAYS, DEFENDANT.



The opinion of the court was delivered by: Samuel Der-yeghiayan, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant The Hungarian State Railways' (HSR) motion to dismiss and on Plaintiffs' motion to strike. For the reasons stated below, the motion to dismiss is denied and Plaintiffs' motion to strike is denied as moot.

BACKGROUND

Plaintiffs brought the instant action against HSR, which is an instrumentality of the Government of Hungary that allegedly played a role in the looting and plundering of Jewish possessions and the expropriation of Jewish funds during the Holocaust. Plaintiffs include in their amended complaint claims based on alleged takings in violation of international law, alleged aiding and abetting genocide, alleged complicity in genocide, alleged violations of customary international law, alleged unlawful conversion, alleged unjust enrichment, and alleged fraudulent misrepresentations. HSR now moves to dismiss the instant action.

DISCUSSION

HSR argues that this court lacks subject matter jurisdiction because it is immune to liability under the Foreign Sovereign Immunities Act (FSIA). HSR also argues that judicial review of these claims would interfere with the foreign relations of the United States, that Plaintiffs have failed to allege sufficient facts to state a claim, and that this case should be dismissed based on the doctrine of forum non conveniens.

I. Immunity Under FSIA

HSR argues that it is an instrumentality of a foreign state and is immune to liability under FSIA, which generally makes a foreign state (or an agency or instrumentality of a foreign state) "immune from the jurisdiction of the courts of the United States." 28 U.S.C. § 1604. Thus, in order to establish jurisdiction pursuant to the FSIA expropriation exception, a plaintiff must establish that: "(1) rights in property are in issue; (2) that the property was 'taken'; (3) that the taking was in violation of international law; and (4) that one of the two nexus requirements is satisfied." Zappia Middle East Const. Co. Ltd. v. Emirate of Abu Dhabi, 215 F.3d 247, 251 (2nd. Cir. 2000); see also Cassirer v. Kingdom of Spain, 616 F.3d 1019, 1022 (9th Cir. 2010)(explaining the "'international takings' or 'expropriation' exception in the FSIA"); Alperin v. Vatican Bank, 365 Fed.Appx. 74, 75 (9th Cir. 2010)(explaining the FSIA takings exception). The nexus requirement is met by showing: (1) "that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state," or (2) "that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States. . . ." 28 U.S.C. § 1605(a)(3). Plaintiffs have alleged sufficient facts to show, at this juncture, that the takings exception to the FSIA, found at 28 U.S.C. § 1605(a)(3), is applicable to the Plaintiffs' claims against HSR. Plaintiffs have alleged facts showing that rights they possessed in property are at issue. Plaintiffs have also alleged facts that, when accepted as true at the motion to dismiss stage, suggest that Plaintiffs' personal property, contractual rights, and interest in real property were taken by HSR and that the takings violated international law. HSR contends that Plaintiffs have not explicitly alleged that it was HSR itself that formally ordered the looting. However, there are sufficient facts included in the amended complaint to infer such a proposition at the pleadings stage.

Plaintiffs have alleged facts showing that HSR conducts commercial activity in this case sufficient to satisfy the nexus requirement for the takings exception. HSR has filed a declaration regarding its lack of business activity in the United States and has pointed to facts in what it deemed to be the "historical record," contradicting facts alleged in the amended complaint. (Szarvas Decl.). However, the motion to dismiss stage is not the proper juncture to resolve disputed facts.

HSR also argues that if a foreign sovereign deprives property from its own nationals that the taking does not violate international law. However, HSR has not shown that looting in the form of aiding and abetting genocide would not violate international law, regardless of whether the victims are nationals of the foreign sovereign responsible for the looting. HSR also argues that it should only be held liable to the extent that a private corporation could be held liable and private corporations are not liable for violations of international law. However, as this court previously ruled in case number 10 C 1884, a corporation can be liable under the Alien Tort Statute. Holocaust Victims of Bank Theft v. Magyar Nemzeti Bank, 2011 WL 1900340, at *2 (N.D. Ill. 2011). Therefore, the motion to dismiss based on FSIA immunity is denied. This court is not adjudicating HSR's defense of sovereign immunity under FSIA on the merits. This court is denying the motion to dismiss because the FSIA issue is not ripe for adjudication at the motion to dismiss stage. Plaintiffs have presented sufficient allegations at the pleadings stage to proceed further in this action at this juncture.

II. Foreign Relations

HSR also argues that judicial review of these claims would interfere with the foreign relations of the United States, arguing that this case presents a non-justiciable political question, that a 1947 peace treaty is not self-executing, and that the claims in this action are barred by the act of state doctrine.

A. Non-Justiciable Political Question

HSR argues that this case presents non-justiciable political questions and that this case should be dismissed under the political question doctrine. The court should dismiss an action under the political question doctrine when any one of the following circumstances is present: a textually demonstrable constitutional commitment of the issue to a coordinate political department; or a lack of judicially discoverable and manageable standards for resolving it; or the impossibility of deciding without an initial policy determination of a kind clearly for non-judicial discretion; or the impossibility of a court's undertaking independent resolution without expressing lack of the respect due coordinate branches of government; or an ...


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